Despite a “challenging” financial environment, Inhibitex Inc. raised $41.4 million in a Series D financing of convertible preferred stock, an accomplishment that will allow the company to move two antibodies into the clinic.

Russell Plumb, chief financial officer for Atlanta-based Inhibitex, said despite an environment that is much more difficult than in the past, his company’s product profile, risk mitigation and intellectual property position made it an attractive investment opportunity.

“What we are doing our therapeutic approach to addressing bacterial infections is somewhat novel,” Plumb said. “We have an antibody approach vs. an antibiotic approach.”

The new money gives Inhibitex enough cash for two years, notwithstanding the potential income from partnerships. To date, the privately held company, founded in 1994, has raised $65 million. (See BioWorld Today, June 15, 2000.)

Inhibitex stands to gain another $4 million from investors by month’s end to complete the Series D financing, for a total of $45.4 million.

Plumb said that this is expected to be the company’s last private financing.

“It was clear to us in discussions with investors and investment banks that the value model over the years has changed,” Plumb said.

Two years ago, he noted, the favored model for biotech companies was to be a research and discovery company, and then license compounds to big pharma. What Inhibitex has done is retain significant rights to its products products that it hopes to get to market in a reasonable time frame, Plumb said, noting that with real estate it is “location, location, location,” and now in biotech it is “products, products, products.”

Furthermore, this amount of money raises Inhibitex’s visibility in the capital markets and positions the company well for partnership discussions, he said.

“The strength of our balance sheet will enhance our ability to enter new, meaningful partnership discussions,” he said.

Plumb said Inhibitex’s “first-in-field” approach is of particular interest now in this age of antibiotic-resistant infections.

Inhibitex said the financing will allow it to get Veronate, its drug for the prevention of Staphylococcus aureus and Coagulese-negative staphylococcal infections in very low birth weight infants, into the clinic by next quarter. Inhibitex will file the investigational new drug application at the end of this quarter.

The second product that it anticipates getting into the clinic is Aurexis, a monoclonal antibody for S. aureus. Inhibitex, Plumb said, has done a great deal of preclinical work on Aurexis, work that it will be completing in the next several months. The company expects to file an IND at the end of 2002 in order to move into the clinic in the first quarter of 2003

Inhibitex also recently in-licensed two undisclosed products, Plumb said, including one for Coagulese-negative staph infections and another potential MSCRAMM target related to Candida albicans. MSCRAMM (or microbial surface components recognizing adhesive matrix molecules) is a protein technology.

Inhibitex is in a Phase II trial at Duke University Medical Center with immune globulin intravenous, a therapeutic product for endocarditis.

In September, Inhibitex entered into a research and commercial partnership with Wyeth Lederle Vaccines for the development of human vaccines targeting S. aureus and S. epidermidis, infections that extend hospital stays. The deal, valued at $23 million, granted Wyeth Lederle, a unit of Madison, N.J.-based American Home Products Corp., an exclusive global license to Inhibitex’s MSCRAMM protein technology for use in human vaccines. (See BioWorld Today, Sept. 18, 2001.)

The funding for Inhibitex was co-led by Baltimore-based New Enterprise Associates, which invested $20 million, and Essex Woodlands Health Ventures, of The Woodlands, Texas. Other investors included CDP Sofinov, of Montreal; Alliance Technology Ventures, of Atlanta; William Blair Capital Partners, of Chicago; and Pacific Horizon Partners, of Seattle.